ISA

An Individual Savings Account (ISA) is a tax-efficient way to save and invest. Any growth on your money is completely tax-free, and you can withdraw your money at any time without paying tax.

If you’re aged 18 or over and a UK resident, you can save or invest up to £20,000 across your ISAs each tax year. This is known as your annual ISA allowance. You can hold more than one ISA, but your annual ISA allowance remains the same. This means you can save or invest up to £20,000 in total across all of your ISAs each tax year.

When opening an ISA, it’s important to understand the different options available. There are several types of ISA, each suited to different financial goals. Understanding how they work, along with their features and potential limitations, can help you choose the one that’s right for you.
In our view, one of the most important considerations is the level of investment risk you are prepared to accept.

Cash ISAs can be a suitable option for shorter-term savings goals. They do not carry investment risk, as your money is held in cash rather than invested in the stock market.

There are several types of Cash ISA available, each offering different features and levels of access:

• Easy access Cash ISA- allows you to save money tax-efficiently while giving you the flexibility to withdraw your funds whenever you need them. Any interest earned is free from UK Income Tax, and you can access your money at any time, although some providers may have their own terms and conditions.
• Fixed rate Cash ISA- typically offers a higher rate of interest in exchange for locking your money away for a fixed period. If you need to withdraw your money before the end of the term, you may have to pay an interest penalty or other early access charge, depending on the provider’s terms and conditions.
• Notice Cash ISA- requires you to give a set amount of notice before withdrawing your money. The notice period can vary depending on the provider and the account terms

From 6 April 2027, the annual allowance for Cash ISAs will change for individuals under the age of 65, reducing to £12,000 per tax year. The overall ISA allowance will remain at £20,000, meaning any remaining allowance of up to £8,000 must be used for investments in non-cash ISA products.

Stocks and Shares ISAs are designed for individuals who are looking to invest for the longer term and are comfortable accepting some level of investment risk. As with any investment, the value of your money can go down as well as up, and there is a possibility you get back less than you originally invested.

The investments held within a Stocks and Shares ISA will depend on your attitude to risk, financial objectives and personal circumstances. We carefully select investments that align with your goals and risk profile, ensuring that portfolios are appropriately diversified to help spread risk and reduce exposure to any single investment.

One potential benefit of investing through a Stocks and Shares ISA is the opportunity for your investments to benefit from compounding over the longer term. This means that any returns generated by your investments may themselves contribute to future growth, helping your money grow over time. However, investment returns are not guaranteed, and the value of your investments can fall as well as rise.

Lifetime ISAs were introduced to help individuals save towards their first home or for later life. Eligible individuals aged 18 to 39 can open a Lifetime ISA and contribute up to £4,000 each tax year. This forms part of the overall £20,000 annual ISA allowance.

The government adds a 25% bonus on contributions made to a Lifetime ISA, paid monthly. This means you could receive a government bonus of up to £1,000 per tax year if you contribute the maximum £4,000.
When opening a Lifetime ISA, individuals can choose between a Cash Lifetime ISA or a Stocks and Shares Lifetime ISA.

Considerations:

• If you withdraw money from a Lifetime ISA before the age of 60 and the withdrawal is not for an eligible first home purchase or another qualifying reason, a 25% government withdrawal charge will usually apply. This means you may receive back less than the amount you originally contributed.
• A Lifetime ISA must be held for at least 12 months before it can be used towards the purchase of a first home. If you withdraw funds before this point, a 25% government withdrawal charge will usually apply.
• To use a Lifetime ISA towards the purchase of a first home, the property must have a purchase price of £450,000 or less.
• In June 2026, the government announced a proposal to introduce a First-Time Buyer ISA, which would replace the Lifetime ISA. The full details and terms of the proposed scheme have yet to be confirmed. Until any changes are introduced, it remains possible to open and contribute to a Lifetime ISA, subject to meeting the existing eligibility criteria.

A Junior ISA is a long-term tax-efficient savings or investment account for children under the age of 18 who are living in the UK. The annual Junior ISA allowance is £9,000 per tax year, and anyone can contribute on behalf of the child, including parents, grandparents and other family members or friends. However, total contributions must not exceed the annual allowance.

A child can hold either a Cash Junior ISA or a Stocks and Shares Junior ISA, and it is possible to have one of each type at the same time.

When the child reaches age 16, they can take control of their Junior ISA. However, they cannot withdraw the funds until they reach age 18, when the account becomes an adult ISA.